ITC Profit Tops Forecast On Cigarette, FMCG Biz

Net profit at the maker of Gold Flake cigarettes and Bingo chips rose to ₹5,031.01 crore in the three months ended 31 December from ₹4,156.20 crore a year earlier. Profit topped the ₹4,659.3 crore estimate in a Bloomberg survey of 16 analysts.

Revenue from operations grew 2.7% to ₹17,265.48 crore from ₹16,806.89 crore a year earlier. Revenue, too, exceeded Street estimates of ₹16,954 crore.

Expenses fell 5.5% to ₹11,459.68 crore, and earnings before interest, taxes, depreciation and amortization (Ebitda) grew 22% to ₹6,223 crore. Margins expanded by 619 basis points to 38.4%.

“Economic activity in India continued to gather momentum with sequential moderation in commodity inflation, even as core inflation remained elevated. Rural demand continued to be relatively subdued, while improving sequentially. Consumer sentiments improved during the quarter, but remained below the pre-pandemic levels," ITC said.

The company said potential risks from an expected slowdown in the global economy, and continuing geo-political tensions are key monitorables.

ITC’s revenue from cigarette business rose 16.7% from a year ago to ₹7,288.22 crore. Cigarette volumes grew 15% with some mix improvement led by up-trading, said analysts. Other businesses in FMCG , including packaged food and personal care products, posted 18.3% rise in revenue to ₹4841.40 crore. Segment margins expanded by 128bps from a year earlier to 7.2%.

“The FMCG businesses witnessed strong growth across channels and markets (both urban and rural) driven by ramp-up in outlet coverage, enhanced penetration and superior last-mile execution. Overall, input costs remained elevated even as some commodities witnessed sequential moderation in prices. The businesses continued to drive improvement in profitability through multipronged interventions viz. strategic cost management, premiumization, supply chain agility, judicious pricing actions, fiscal incentives, leveraging digital and optimizing channel assortments," ITC said.

Categories such as staples, biscuits, noodles, snacks, dairy, beverages and soaps, drove growth for the company’s packaged goods vertical in the December quarter.

Meanwhile, the agri business saw a steep 36% revenue fall to ₹3,305.21 crore. “Segment revenue for current quarter reflects the impact of restriction imposed on wheat and rice exports by the government during the year," it added.

The hotels segment continued to benefit from an uptick in domestic tourism. Segment revenue surged nearly 50% to ₹712 crore. “Domestic business travel normalized while inbound foreign travel saw a pickup; this augurs well for the company’s portfolio comprising a relatively higher salience of business hotels. Special occasions and festivals were effectively leveraged to drive demand."

Ahead of the earnings, ITC shares closed 0.5% higher at ₹380.50 apiece on a day the benchmark Sensex rose 1.5% to 60,841.88. The stock touched a record high of ₹384.5 apiece on Thursday, a day after the budget.